I use Jet audio player. Its a free download. It can record songs as it plays. I use those to cut a few section of songs or movie sound to use as ring tones in my mobile.
Its completely free. You have a record option... select a file to play and click on record, it gives you option to choose to the file type to save i.e wav, or mp3 and several other types. Just click on stop button when you are done. The part of the captured sound will be saved in the location chosen. I did not see any quality drop. You need not have any extra gadgets. It works perfectly fine for me and i am still using it